Acting yesterday on behalf of all the trans-Atlantic megabanks, Bloomberg News panicked.

In an prominent editorial, "The Worst Banking Scandal Yet", Bloomberg wrung its hands that the big banks are caught in their crimes and could all be about to be destroyed. "The scandal over the manipulation of Libor has the potential to become one of the most costly and consequential in the history of banking. If the financial institutions involved want to prevent it from overwhelming their businesses and damaging the broader economy, they'll have to act fast." [Emphasis added]

The financial news service said that "Investigators in the U.S., Canada, Europe and Asia are piecing together a breathtaking portrait of avarice and deceit.... More important, criminal charges for the first time could threaten a significant number of bankers and traders with jail terms for their actions during the financial crisis..."

But then the editorial turned to the tens of thousands of marching lawsuits whose leading vanguard have already burst into view. "A systemic disaster," they cried. "Plaintiffs ranging from investment firms to municipal governments, many of which bought bonds or entered into contracts that provided payments tied to Libor, are demanding compensation from banks for intentionally pushing down the benchmark. Attempts by traders to rig Libor on specific days, portrayed in detail in the Barclays case, will undoubtedly elicit more legal actions.

"Estimates of payments related to lawsuits are currently in the billions or tens of billions of dollars" — but will, Bloomberg is sure, get much larger than that. They take a swing at measuring the magnitude of the crime. "Consider this: If Libor was understated by an average of only 0.1 percentage point for a year, the discrepancy on the roughly $300 trillion in interest- rate swaps outstanding at the time [2008] would add up to $300 billion. That's about a fifth of the aggregate capital of the 16 banks whose reports were used to calculate Libor in 2008."

Rather than "cripple the entire banking system," they wail, "Bank executives, regulators and prosecutors should be thinking now about how to come clean quickly, compensate the victims and move on." Maybe, says Bloomberg, a huge compensation fund, BP-style", ponied up by the banks to compensate victims?

Forget it. Another "big 5 mortgage settlement" from Obama, Geithner, and Holder? Not this time. These banks, in their current form, activity, and management, are illegal, finished, and going to prison, respectively. Glass-Steagall will clean them up and put a different kind of banking in their place.